Opinion: SkyTrain expansion can be funded by catalyzing development revenues

Written for Daily Hive Urbanized by Lee Haber, who is an urban and transportation planner and the director of strategy and partnerships at Mountain Valley Express, a non-profit organization whose mission is to bring world-class regional rail to the South Coast of British Columbia.

Just weeks ago, the second tunnel boring machine named Elsie fully completed the tunnelling process for the Broadway Subway, an extension of the Millennium Line that will serve British Columbia’s second-largest job centre and be one of the busiest sections of Metro Vancouver’s SkyTrain network when it opens.

However, anybody who has ridden a bus along the corridor knows that the job is only half done: it still doesn’t reach the University of British Columbia (UBC), the province’s largest university.

Despite being discussed and studied for decades, there is still no funding in place to get the extension built. It will almost certainly only open more than 20 years since the provincial government first announced its intention to extend Skytrain to UBC in 2008.

The UBC Extension isn’t the only public transit project that is on the backlog; the North Shore wants a rapid transit link across Burrard Inlet and the South Fraser wants rapid transit down King George Boulevard. Many of these projects have been talked about for decades. All of them are needed if we want half of all travel using sustainable modes.

Our region isn’t sitting still either — it is growing rapidly and is expected to hit three million this year and over four million by 2050. We are struggling to build yesterday’s infrastructure when we need to be building tomorrow’s.

If you ask any local politician why shovels aren’t in the ground yet for the UBC Extension, you will probably hear something along the lines of, “We don’t have the money” or “We need funding from the federal government.” I would assert that the real problem isn’t a lack of funding but our approach to getting public transit infrastructure built. The current process of begging higher levels of government for money means years of studies and back-and-forth dialogue before anything gets built. Business as usual simply cannot keep up with demand.

Development to the rescue?

How do we solve our public transit infrastructure crisis? Perhaps the best option is to emulate what is done in many cities around the world and use the development around public transit to help pay for it.

Historically, public transit operations have always been considered only one side of a two-sided business model, where the other side is development. Convenient public transit access spurs development and the proceeds from development help offset the significant capital costs of building such transportation infrastructure.

There are many ways to do this from direct development to property levies around stations. Perhaps the most powerful mechanism is granting development rights around stations to the public transit builder. This approach emulates how Hong Kong funds its public transit expansion and allows it to make a profit while providing world-class public transit with fares less than $1.

Instead of needing to compete with other bidders and purchase land, the public transit builder, as a reward for building new infrastructure, is granted development rights by the government. If the landowner wishes to build anything above the current density, they need to acquire the development rights from the public transit builder. Thus, the public transit builder can either sell these rights or use them as a bargaining tool when negotiating a stake in the development.

What if we combined this approach with the province’s new Transit Oriented Areas (TOA) legislation that mandates that municipalities permit certain minimum densities around designated public transit hubs? What if we granted this newly allowed density as development rights to help pay for the new public transit? Would this provide enough funds to pay for public transit expansion?

Gold beneath our feet

What if we combined this approach with the provincial government’s new TOA legislation that mandates that municipalities permit certain minimum transit-oriented development densities around public transit hubs? What if we granted this newly allowed density as development rights to help pay for the new public transit? Would this provide enough funds to pay for public transit expansion?

As a case study, let’s examine the TOA around Macdonald Street (at West Broadway), one of the stations along the proposed SkyTrain extension to UBC. Most of the existing density in the area is between 0.4 and 1.0 FAR; however, for simplicity, we’ll conservatively assume that it is all 1.0 FAR. FAR, short for floor area ratio, is the standard for measuring density, which expresses the size of the total building floor area compared to the lot size the building sits on.

We’ll also exclude existing apartments (lower development potential) and properties excluded from the TOA such as institutions. We also need to exclude properties that overlap with the existing Arbutus Station TOA.

transit oriented area policy theoretical 2 macdonald street station

Theoretical transit-oriented area around the future Macdonald Street Station (on West Broadway) of the UBC SkyTrain Extension. (Lee Haber/submitted)

transit oriented area policy theoretical 1

How transit-oriented development within transit-oriented areas could help pay for public transit investments. (Lee Haber/Submitted)

It turns out the proceeds from selling development rights around one station would be able to pay for the entire UBC Extension… several times over! We estimate (see more on the methodology here) that close to $13.2 billion could be raised from the sale of development rights, a figure that is close to three times the high estimate for the cost of the entire extension ($4.5 billion). This would also likely be enough to fund rapid transit along Hastings Street and to the North Shore.

Keep in mind that this is only for one station. The extension will likely have at least four other stations each with their own TOA. In addition, any new rapid transit (or regional rail project) will have several stations, each with its own TOAs and development rights that could be used to pay for them.

Will the end figure be $13.2 billion? Likely not. Municipalities need to collect Development Cost Contributions (DCCs) and Community Amenity Contributions (CACs) to pay for utility upgrades and new community infrastructure. A flood of new density will likely reduce land values. However, even if the end figure ends up being one-third, it will still be enough to pay for the extension, and remember, it is only one station.

The point of this article is that we don’t need to go to higher levels of government and wait a decade to build the public transit we need now. The resources we require are right under our feet if we have the imagination and courage to take advantage of them.

There is a Chinese proverb that states that in every crisis, one can find opportunity. We already recognize that we have a housing crisis. Let’s seize this opportunity and use our housing crisis to help solve our public transit infrastructure crisis.

We have the resources for significant rapid transit expansion if we’re willing to apply a bit of imagination.